Savannah Petroleum Share Discussion Threads

[teataster] 24/7/2015 11:39

Guys, looking to get in here in a small way. When do we realistically expect drilling to start, and are we going to see 38p placing price in the meantime?

[wardrv] 15/7/2015 12:07

Barclays seem to be scrabling around to find any stock. any reasonable buys will move the price now.

[zengas] 14/7/2015 17:40

On R3/R4 40 seconds in, CEO says -

"It's a very, very important transaction for us given that it will increase our size in Niger and also puts us in very good stead in terms of the discussions that we're having going forward with intended parties."

Maybe the acquisition of R3/R4 will make it materially more attractive for a farm in partner and perhaps a condition of what a partner actually requires.

[steelwatch] 14/7/2015 15:45

There ya go ttt:

[thomasthetank1] 14/7/2015 15:31

Guys - Just heard this audio interview of Savannah Petroleum's Chief Executive, Andrew Knott, on Proactive Investors.

[...]

[thomasthetank1] 14/7/2015 10:16

Morning guys - Just wanted to pass on an updated note from Mirabaud on Savannah Petroleum. Following all of last week's news flow they have increased their target price on the Company by 9% to 125p a share.

Savannah Petroleum – Land grab

Last week Savannah (SAVP) announced a US$36m placing at 38p/shr, a slight premium to the prior day’s close. The proceeds are intended to be used principally to acquire the under-explored R3/R4 PSC area which lies in the Agadem basin immediately to the south of Savannah’s R1/R2 PSC and previously formed part of CNPC’s Agadem licence prior to relinquishment (like R1/R2). The acquisition significantly expands Savannah’s footprint giving it control of ~50% of the Agadem basin – with CNPC holding the balance – and sews up the remaining unlicenced acreage, strengthening Savannah’s hand in future farm-out discussions. In addition to the placing, Savannah’s independent auditor CGG Robertson has doubled its estimate of risked resources on R1/R2 to 1.2 bn bbls, and verified SAVP’s internal volumetrics for the 14 mapped prospects within the 3D area. Taken as whole, we view last week’s events as both value accretive and strategically important for Savannah. As such, we reiterate our BUY recommendation and increase our target price 9% to 125p/shr (from 115p/shr previously).

[cashpile] 11/7/2015 11:40

looks interesting, may have a small dabble next week.

Dalesman , are you out of GKP and LGO now ?

[zengas] 10/7/2015 10:39

This deal makes me beleive a farmout for R1/R2 is close.

You would hardly raise capital/dilute and take on another substantially priced asset with little in the pot for starting a major drilling campaign.

Yet - They have received all drill and seismic permiting - "There are no further authorisations required to enable Savannah to acquire seismic and drill wells over the entire R1/R2 area for the extent of its Exclusive Exploration Authorisation".

Also they have SIGNED the well engineering design and seismic contracts for R1/ R2.
R1/R2 was awarded on 4th July last year so we are into the 13 month with just under 3 years remaining and a likely 1 year extension.

Drilling would need to start in Q4 (next 3-4 months) as this cuts the available timescale to just 2 & 3 quarter years before any extension.

The CEO said an intensive drilling campaigm and reckons $150m is acheivable from a farm out.
$100m for drilling (about 20 wells given that some will be deeper than others because previously it was just the eocene) and $50m for seismic and possible back costs - that might therefore enable them to spend some of that to satisfy 3D acqusition on the R3/R4 permit and have it ready for a seperate future farmout deal (or possibly include it now as part of an expanded deal ?).

If we get some of the 81% high chance of success on R1 drilling, we'd be able to book reserves, attain a much higher share price and do a bond raise for say $200m for our 50% share of the next drilling phase. We would need roughly to drill a total of 100 wells to target all the reported potential and acheive that outright £9.60 ultimate mid case/50% farmout share price i used 2 days ago.

100 wells would be acheivable on a 3 year basis with 3 - 5 rigs. (There are 3 warm stacked available now). CNPC are apparently now using 6 after achieving 975 mmbo P2 in the last 5 years.

For SAVP it will be a drilling race aginst the clock.

With the new shares in issue and in my post 2 days ago of a £9.60 RISKED share price in that drilling time frame - my share price target REDUCES to £6.57 RISKED - subject to that level of success being attained in line with those provided from the CGG update to Savannah.

Nothing attributed as yet to R3/R4 but i expect that to replace the upside potential in the coming months.

[taudelta1] 10/7/2015 09:39

Greater substance of SAVP could expand the field of interested parties for farm-in, even though R3/R4 will not initially be included .. GLA

[dalesman] 10/7/2015 08:36

The new acreage is around 5/8th of R1 + R2

IF the unrisked prospective resources on blocks R3 + R4 are in the same ratio as on R1+R2 then we should add a further 1.5 billion barrels of unrisked prospective resources to the total.

That upside is massive.

BUT we will have to wait for a CPR to have this confirmed.

I MAYBE jumping the gun at this moment in time but I'm sure the team of 6 geologists will have gone over the figs with a fine tooth comb and I expect the prospective resources to be at least in line with those announced for R1 + R2.

My share price target based on the fully diluted tranche 1 + tranche 2 figures, providing the upside conjectured above is in the right ball park and the proposed farm in at $150m is achieved is in excess of £4

As the BOD hold 19% of the shares, pre placing. they must see this acquisition as adding value to their holding if so its logical that the placing adds value to my own holding.

Good stuff :0)

Travelling all day so won't be able to reply to any comments until later.

Kind regards

Phil

[zengas] 10/7/2015 07:14

Fully completed bookbuild at 38p by new and existing institutional shareholders is a major vote of confidence.

Will be a total of 193.03m shares in issue as a result of this $36m placing.

[zengas] 09/7/2015 18:47

Bookbuild expected to be completed by tomorrow at 8am by existing and new institutional shareholders so clearly shows confidence.

Expected to get these blocks by having the funds in place to pay the $31m signature bonus.

On the 2nd June Africa Intelligence reported that R3 and R4 were also relinquished by CNPC in 2013 in line with the conditions of their acreage (as they did with R1&2).

At the same date, they also reported that the R3/4 blocks were being sought by Nigerias "Oranto headed by billionaire Arthur Eze" They also said "CNPC is reportedly interested in the permits but it could be handicapped by its ultra dominant position on Agadem".

Back at the beginning of April it was also reported in an article by the same source - "The two other blocks relinquished on Agadem in 2013 by CNPC, R3 and R4, have not yet been formally awarded. While the Oranto Petroleum"Oranto Petroleum group of Nigerian businessman Arthur Eze"Arthur Eze has a head start to acquire them (AEI 735), CNPC itself is also bidding for the two key permits.

[taudelta1] 09/7/2015 17:34

No CPR for R3/R4 ... so it's more difficult to place a value on the shares now ... we shall see what the market thinks tomorrow .... GLA

[gray1107] 09/7/2015 17:23

9 July, 2015

Savannah Petroleum PLC

("Savannah" or the "Company")



Proposed placing of new ordinary shares to raise approximately US$36m (£23.4 million)



Savannah Petroleum, the Niger focused oil and gas company, announces today its intention to raise up to US$36 million (£23.4 million) through an issue of new ordinary shares of £0.001 each ("Ordinary Shares") by way of a placing (the "Placing") with institutional investors (the "Placees") to enable the posting of a bank guarantee with the State of Niger in relation to the planned acquisition of the R3/R4 Production Sharing Contract ("R3/R4 PSC") in south-eastern Niger.

The Placing is being conducted through a bookbuilding process, which will be launched immediately following this announcement and will be made available to new and existing eligible institutional investors. Mirabaud and Stifel have been appointed as Joint Lead Managers in respect of the Placing.



Details of the Placing



The Company intends to place new ordinary shares of par value £0.001 each in the share capital of the Company (the "Placing Shares"), raising gross proceeds of approximately US$36 million.



The Placing Shares will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares of the Company, including the right to receive all dividends or other distributions made, paid or declared in respect of such shares after the date of issue of the Placing Shares.



The Placing Shares are to be issued in two tranches, the second of which is conditional, inter alia, on the approval of Savannah shareholders:



First Tranche



It is intended that a first tranche of 43,779,057 new Ordinary Shares (the "First Tranche Shares") will be issued immediately following settlement on or by 13 July 2015. It is expected that the net proceeds raised from the First Tranche, together with the Company's existing cash resources, will enable the Company to post a bank guarantee with the State of Niger to enable payment of the signature bonus and related expenditures of approximately US$31 million for the R3/R4 PSC Area.



Second Tranche



A second tranche of new Ordinary Shares (the "Second Tranche Shares") will be issued on or before 3 August 2015, subject to, inter alia, the receipt of shareholder approval of the necessary resolutions to enable the issue of the Second Tranche Shares. The Company will be convening a general meeting for the purpose of considering, inter alia, the necessary resolutions shortly. The funds received as a result of the issue of the Second Tranche Shares will replenish Savannah's cash resources to be used for general working capital purposes.



Application has been made to the London Stock Exchange for the First Tranche Shares to be admitted to trading on AIM ("Admission"). It is expected that Admission will take place and that trading will commence on AIM at 8.00 a.m. on or around 13 July 2015. Following the issue of the First Tranche Shares, the Company will have 175,116,229 Ordinary Shares in issue and there are no shares held in treasury. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

[dalesman] 08/7/2015 18:58

Hi Zengas

At this stage is the development of the company I only risk highly what I can see will be drilled in a 18 month to 2 year period. I a very wary of prospective resources - they only have some prospect of coming to reality so I now always down grade that particular category.

From years of being battered by the 'slings and arrows of outrageous fortune' I have found that risking prospective resources is a blunt tool and now I usually don't risk prospective resources at all in my valuations.

In the case of Savannah I have relented and risked the prospective resources at 3% COS while risking the first 5 wells to be drilled with a 75m target at 30% and the remaining 9 wells in the 14 well 'oven ready" drill campaign at 15%. Thats my decision and I'm comfortable with doing so.

For now I would rather remain ultra conservative and that trait has meant that I have reduced the near time risk assessment to 3% for prospective resources that lie outside my comfort zone which stretches only as far as phase 1 of the up and coming drilling campaign. Each to his own!

HOWEVER

If you insist that I go by the prospective risking in the CPR at the 48% level from your post above, and I'm sure you will, then the target is £14.54 allowing for a 50% farmin.

You can now sleep easy in you bed!

Kind regards

Phil

[zengas] 08/7/2015 18:23

Dalesman -

A 48% Chance of success has been applied IN TOTAL ACROSS the Eocene and Yogou which is almost a 1 in 2 chance of success and extremely high.

The R1 area is rated as having an 81% COS or just better than 4 out of 5 for the Eocene target. R2 is rated as 60% for the Eocene. Your post has you risking it at 3% but unfortunately you are way off on this. If you are risking 3% on the total 2.486 billion bls unrisked prospective resources - you would only get a grand total of 75 mmbls. Farm half of that out leaves 37.5 mmbls and a 20% government back in would leave SAVP with just 30 mmbls. No institution let alone SAVP management would be in this for 3% let alone have gotten any of the prior backing. The RISKED FACTOR is 48% ie a smidgen off a 1 in 2 expected well success across all the licence.

It's 81% COS for the R1 Eocene and described by Mirabaud as the low hanging fruit.
Therefore CCG are applying a 1 well from 2 as success across both formations in the entire blocks. But in R1 for the Eocene target they are expecting 4 out of 5 wells therefore to be successful.

They haven't mentioned any pad drilling. They are talking about 5 individual fields ie satellites and including any largest discovery tied to a central processing facility - what they call a 'hub and spoke'.

[dalesman] 08/7/2015 17:59

TheLung

LOL

GKP was a disaster due to political risk and ISIS - sorry my crystal ball was not operating well! But then I did buy the bulk of my holding at 5.6p and even at 33p thats a good upside. ( I did add a few at higher prices and wish I had sold at $4.60)

I'm having as my epitaph - He should have learnt to sell

LGO - just made over 25% profit short term on my last sell - very happy and if you held from 0.4p that would be a 7 bagger - not bad!

SAVP - well do your own research!

[thomasthetank1] 08/7/2015 17:40

The video can be found in the Stocktube section of Proactive Investors website.

[thomasthetank1] 08/7/2015 17:39

Hi guys,

Looks like the CEO, Andrew Knott, did a video interview this afternoon, further explaining today's positive news flow and what it means for Savannah Petroleum going forward.

[...]

[thelung] 08/7/2015 15:54

Dalesman, are you going for 3 out of 3 after GKP and LGO?

[dalesman] 08/7/2015 15:37

While I have some access to the internet ( I’m away on holiday) here are my initial thoughts / summary of the Savannah RNS.

Savannah today posted a new RNS updating the old CPR figures, the new data set is impressive to say the least.

The risked prospective resources have almost doubled from 573 mmbbls to 1,191 mmbbls.

The cost of transporting any find to the Chinese run pipeline has been reduced from $18 to $16

Their breakeven oil price is $42.5 and the long term price assumption in the report is $70 . Hopefully in 4 years time this value will be eclipsed!

Savannah has received all the necessary permissions given by the Niger Government to commence drilling and conduct seismic operations on its R1 and R2 concessions.
Their 14 well drill ready targets, identified using 2D and 3D seismic, the Full Tensor Gravimetric survey shot by ARKeX and a geophysical soil survey have all been combined by the SAVP team of 6 geologists to help identify multiple targets in their sub surface model, this work has been validated by the CPR.

The 3D seismic and other data sets all helping to establish that trap, seal and source rocks are all present. The Chinese have upped their success rate from 20% using 2D seismic to over 75% by using 3D seismic.

The prospective resources for these 14 wells has been increased to 259mmb

Production assumed to commence four years from discovery of the principal field at a peak plateau rate of 25kb/day. The estimated capital costs (including abandonment) of US$8/bbl (2015 real), operating costs of US$7/bbl (2015 real) and an expected export pipeline tariff of US$16/bbl (2015 real, see below) all appear to be positive for Savannah.

The report has upped the recovery factor from 25% to 30%

Using my own spreadsheets view the screenshot at



Risking all the prospective resources a 3%

Risking pad 1 – five wells at 30% (drilling success in the Agadem Rift Basin achieved by the Chinese is running at 75-80%)

Risking the remainder of the 14 drill ready sites at 15% (the new CPR give 257mbo)
The share price target is In My Humble Opinion a ten bagger (current share price 38.5p)

Everyone should do their own research and act accordingly.
Kind regards

Phil

[zengas] 08/7/2015 07:40

Excellent news with drilling estimated in this half.
High chance of success based on CNPCs 975 mmbls of P2 on the adjacent acreage.

Looking at todays RNS and $4.50 valuation per barrel.

Gross recoverable oil RISKED basis = 1191 mmbls (almost 1.2 billion bls).
(UNRISKED 2.486 billion bls Sokor + Yogou targets which has delivered 975 mmbls P2 adjacent for CNPC).

95% NET recoverable interest = 1.131 billion bls.

30-40-50% farmout would leave 565 - 678 - 791 mmbls net recoverable.
At todays discount rate of $4.50/barrel = $2.03b - $2.44b - $2.847b potential value after 20% Government back-in.

At current 131.34m shares and an ex/rate of £1=$1.60 = £9.60 share price target on a 50% farmout and on a risked basis.

[thomasthetank1] 07/7/2015 19:20

Hi guys - Good note out from RBC Capital Markets today.

Savannah Petroleum PLC
Initiating coverage: Second-Mover Advantage

Our view: Savannah Petroleum offers the upside potential of a 'basin- opening' explorer, but with less 'frontier risk'. The company plans to drill in Niger's under-explored Agadem Basin, which is being opened- up (geologically and commercially) by CNPC, which has discovered 975mmbbl and plans to commence exports in 2017. We initiate coverage of Savannah with an Outperform (Speculative Risk) recommendation, and a 100p Price Target.